US SUPREME COURT TO DECIDE WHETHER INVESTORS MUST TAKE INDIVIDUAL ACTIONS TO PRESERVE SECURITIES ACT CLAIMS
For 40 years, individual and institutional investors could rely on the efforts of capable class action plaintiffs and their counsel to protect their US federal rights and remedies against corporate wrongdoing. However, in July 2013, the Second US Circuit Court of Appeals threw a wrench into this longstanding jurisprudence when it held in Police and Fire Ret. Sys. of City of Detroit v. IndyMac MBS, Inc. (IndyMac) (721 F.3d 95 (2d Cir. 2013)) that one of the limitations periods for individual claims of shareholders was not suspended during the pendency of class action proceedings.
As a result, investor claims for violations of the Securities Act of 1933 may be barred by the three-year limitations period in the Second Circuit unless such investor takes affirmative individual steps, such as filing a motion to intervene in the pending class action or filing an individual complaint to preserve its rights before the three-year period expires.
The Second Circuit’s decision created a direct conflict with the Tenth Circuit Court of Appeals’ decision in Joseph v. Wiles (Joseph) (223 F.3d 1155 (10th Cir. 2000)). The ensuing conflict and confusion among the lower federal courts resulting from the Second Circuit’s IndyMac opinion has led the Supreme Court to grant certiorari and consider arguments in this matter. The Supreme Court is set to decide IndyMac during its 2014 October Term.
Jul-Sep 2014 issue